Many companies provide their financial statements, along with a Registered Professional report, to lenders, investors, suppliers and customers. Informed readers of the report will gain varied levels of comfort based on the type of financial statement provided.
Not all reports are the same. A Professional Accountant can provide different levels of service related to a company’s financial statements.
Businesses should work with their external accountants to determine what their real needs are so they can decide the right level of service. Is the need for the financial statement a debt covenant requirement? Shareholder use? Regulatory requirement? Performance measurement? Or perhaps compensation calculation?
With a clear understanding of what is needed, the correct decision can be made appropriately without wasting resources.
What is a review?
A review engagement is conducted to provide limited assurance that there are no material modifications that should be made to the financial statements for them to be in conformity with the financial reporting framework.
Review engagements provide less assurance to the reader of the financial statements because the certified independent reviewer does not perform many procedures. The broad review procedures required to be performed by a professional accountant are:
These analytical procedures provide better understanding of key relationships among certain numbers. This understanding gives more assurance about the reasonableness of the financial condition presented in the financial statements.
Based on the inquiries and analytical procedures, the professional accountant is able to express only limited assurance that there are no material modifications that should be made to the financial statements for them to be in conformity with the applicable financial reporting framework.
Because a review engagement is substantially less intensive in scope, the professional accountant cannot express an opinion on the fairness of the financial statements taken as a whole.
What is a compilation?
In a compilation engagement, the objective is to assist management in presenting financial information in the form of financial statements without undertaking to provide any assurance that there are no material modifications that should be made to the financial statements so they will conform to the acceptable financial reporting framework. Because of the even more limited scope of compilation procedures, the professional accountant’s report will not express an opinion or provide any assurance regarding the financial statements.
A compilation involves (1) gaining a general understanding of your business, accounting principles used and financial reporting system and (2) presenting financial information in the accepted format of proper financial statements. The professional accountant expresses no assurance about the accuracy of the financial statements presented. The report attached to the financial statement emphasizes that the service is a compilation.
While independence is required at the other levels of service, the professional accountant does not have to be independent of your organization to perform a compilation. The report must state that the accountant is not independent.
Further options lie within the compilation level of service. The compilation report may be a full disclosure report with complete footnote explanations of certain amounts and policies contained in the financial statements. Or, these otherwise required disclosures may be omitted. Omission of this information is not permissible under the other levels of service.
We ensure and take every possible measure that our work is completed within the ambit of legislative structures. We adopt and apply all the latest Financial Reporting Standards and techniques. By continued upgrading technology systems and software, our teams remain at the forefront of the latest sophisticated Financial Reporting trends.
Whether you’re a listed or unlisted company; family owned or privately-held, we will get to know your business inside-out. We take the time to properly understand the nature of the business so that we can identify solutions to challenges and offer real contribution to the efficiency and profitability of your business.
Marican gets involved in all phases of an review. This allows our clients more face time and direct access to our professional team who can offer you proactive and value-added advice.
Independent reviews offers assurance. Marican conducts thorough, professional reviews for your business and offers suitable solutions and suggestions.
We strive to know our client’s businesses inside-out so that we can help you identify material misstatements. We also identify any material misstatements risks.
Our professional team will perform analytical procedures and carry our relevant enquiries when performing a review in order to acquire sufficient and appropriate evidence.